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Singapore

3 Things About OSIM

osim outlet Established in 1980, OSIM is a global leader in well-being and healthy lifestyle and has been a strong supporter of healthy living through its sponsorship of many marathons. However, if you think that OSIM international limited (SGX: O23) only sell massage chairs through their retail outlets locally, you’ll be in for a surprise.

Let us look at 3 interesting facts about OSIM.

1) More than just massage chairs

It seems that OSIM is interested in anything as long as is is somewhat related to healthy living. In fact, massage chairs only account for about 50% of OSIM’s revenue. OSIM also has interests in nutritional supplements (franchise rights for GNC and Richlife) and lifestyle products (under the Brookstone stores).

What got my attention was OSIM’s distinctive purchase in stake for the TWG Tea business in April 2011. In a short period of time, OSIM has managed to bolster TWG Tea into a luxury tea brand, entered new distribution channels such as airlines and hotels, and making profits. The company is now opening stores across China, South Korea, Taiwan, and Hong Kong.

2) Focus on Branding and Innovation

OSIM has grown over the years to become Asia’s top brand in well-being and healthy lifestyle products. The company frequently hires famous actors and actresses to endorse its products. An example is getting Andy Lau to promote the uDivine massage chair and broadcasting the advertisement through different media channels.

As OSIM seeks growth from the affluent population in China, key risks such as rampant imitation still exists. To-date, the company has been able to fend off competition and maintain a leadership position through constant product innovation and astute branding.

3) Ron Sim, Founder of OSIM

The biography of OSIM’s founder is an inspiring rags-to-riches story. Ron Sim is one of 7 children. Born in a struggling family, he took on odd jobs to help support his family even before he turned 9. While working a variety of jobs to fund his education, he realised that he had a flair for selling.

In 1987, Sim started a company named Health Check & Care selling health-care related products which was renamed OSIM in 1994. The name OSIM is a combination of his own surname – “SIM”, with the “O” in his dream to turn OSIM into an international brand one day.

Ron Sim believes that periods of recession provide him with the best opportunities to expand his business, as it reduces both startup and advertising costs. The reason behind the diversification to various brands like TWG and GNC is due to Sim’s philosophy of starting up 4 different healthcare specialization lines – Health Focus, Hygiene Focus, Fitness Focus, and Nutrition Focus. In spite of his diversification efforts, he believes that the company would not lose sight of its core business, as each OSIM division will be run as a separate business entity.

Foolish Bottom Line

 At current levels, OSIM is trading at about 14 – 16 times earnings with a 2% yield. It is interesting to note that the company performed some share buybacks after a recent drop in its stock price.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.

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